Mountain Manufacturing Uses a Standard Cost System in Which Manufacturing

question 99

Essay

Mountain Manufacturing uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of standard machine-hours. At standard, each unit of product requires one machine-hour to complete. The standard variable overhead is $1.75 per machine-hour and Budgeted Fixed Manufacturing Costs are $300,000 per year. The denominator level of activity is 150,000 machine-hours, or 150,000 units. Actual data for the year were as follows: $\begin{array}{lr}\text {Actual variable overhead cost. }&\$ 211,680 \\\text {Actual fixed manufacturing overhead cost }&\$ 315,000 \\\text {Actual machine-hours }&126,000 \\\text { Units produced}&120,000\end{array}$ Required:
a. What are the predetermined variable and fixed manufacturing overhead rates for the year?
b. Compute the variable overhead rate and efficiency variances for the year.
c. Compute the fixed manufacturing overhead budget and volume variances for the year.

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Definitions:

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